Should Mortgage Brokers charge Upfront Fees?

Many Mortgage Brokers are opposed to the idea of charging upfront fees for different reasons.

I have tried both models and ‘user pays’ makes good business sense.

For the Broker Businesses that are opposed to charging fees, often the thought process is that “we get paid by the Lender”.  Of course, this is only true for the loans that settle.

But what about all the other deals that do not proceed…the reason does not matter…

What matters is that you have spent hours working for free…there is no other way to put it!

The payments for the settled loans must absorb the ‘cost of hours’ spent on files that did not proceed. This is the only way to get a true ‘cost of business’ figure. Most small businesses cannot sustain this long term.

I started charging a ‘commitment fee’ over 12 months ago and have not looked back.

The key is to have a process, and to be able to explain, at the enquiry stage, what you will do that is ‘complimentary’ and what requires payment. It is no different to other professional services such as Accountants, Solicitors and even Doctors!

The Commitment fee I receive pays for my professional knowledge, research, and recommendations.

The Lenders only renumerate me for placing the loan with them.

(when I receive payment from the lender, I choose to refund the commitment fee back to the client)

In my experience the clients that are happy to pay a fee expect value for money, and that is what they get.  I am more focused, efficient and am not wasting my time on files that may not go anywhere.

Since charging a fee my clients have been good quality, serious buyers and I have freed up my valuable time to spend on growing my business through marketing etc.

Best of all I have my work/life balance back!

If you are a Broker trying to make this decision, take the emotion out of it. Value your time and skills.

There are plenty of advisors and business coaches out there that can help you – of course you will be expected to pay a fee for their service!

Quote “If a client does not make you money then they are not a client” – Annon

Deborah Murphy

Aussie Dream Home Loans

Footnote: The opinions expressed in this article are that of Deborah Murphy only and are not intended to offend, discriminate, or be viewed as advice.